Dismissed without cause, but not paid the severance owed
Question: What happens when an employer dismisses a worker without cause but does not pay what is owed under the employment contract?
Answer: There is a recent Ontario case, Timmins v. Artisan Cells, which answers this very question. It involved an employee who held a vice-president position and who had three years of service/tenure. The company had him sign an employment contract prior to hiring him, which specified that if he were dismissed without cause, he would get the statutory minimums or three months’ pay, whichever amount was greater.
When the company later dismissed the employee, it refused to pay the employee pursuant to the contract unless the employee signed a full release (waiver of claims).
The employee refused to do so on account of advice from his lawyer (there were some concerns with the wording of the contract). The employer refused to pay the three months of pay owed, without getting a full release from the employee. Instead, it paid him one week of pay, which was even less than the statutory minimums owing (three weeks’ pay)!
The case went to trial and the court found that the company had shown it did not intend to be bound by its contract.
As a result, the contract had been “repudiated” at law. This meant that the employee was free to pursue a more generous common law severance than what was contemplated (but poorly drafted) in the employment contract.
The result was that the employee was awarded nine (9) months’ pay by the court, or triple what the contract had envisioned. If the company had acted differently, or the employee had not stood his ground, it may have resulted in a different outcome, of course, but the case illustrates some of the issues that can be at play in a wrongful dismissal case.
This article was originally published by The Hamilton Spectator.
